It’s hard to beat the system
When we’re standing at a distance
So we keep waiting
Waiting on the world to change

~John Mayer

I hear it all of the time. We’re going to wait. Wait to buy, wait to sell, wait for the real estate world to change. I get it. No one wants to make a mistake with the largest financial transaction of your life. And adulting is scary, right?

The thing is, in this world there is a cost for everything.

Just last week I took one of my cars into the shop. The air condition wasn’t working. It’s not my daily driver, but my daily driver has proven to be a little unreliable. It’s brand new and has spent 11 days of it’s first year in the shop. It needs to go in again because the seat belt chime won’t quit bleating at me. So I took my steady Eddie into the shop to get the air conditioner looked at. That car has an oil leak that is going to take a day’s worth of work to correct. That’s an expensive job and I’ve been putting it off for two years now. Well, there’s a cost for procrastination. In my case it was a hose in the air conditioning system that rotted out because oil was dripping on it…from the oil leak I put off fixing. The cost of procrastination for me was $400. I might as well have dropped that $400 in the street and set it on fire, because had I fixed the oil leak when it was discovered, the air conditioning would have never failed. The cost of waiting.

Ten years ago when I moved into my home I installed an air conditioner at my house. I rescue dogs and always have at least one male dog here. Apparently air conditioners are a big deal with male dogs. Once they lift their leg on it, the unit warms up when it’s being run and their scent goes all over the neighborhood. It’s a four legged win/win. And it will rot out an air conditioning unit in about 8 years. I could have built a fence around it, or hosed it off weekly and that would have saved it. I never got around to it so I got to spend another $11,000 replacing the entire system because the old kind of freon systems have to be completely replaced. The cost of waiting.

Now I get waiting. I’m have it down to expert level. It’s not always the best course of action.

Bay Area homes are expensive. Ridiculously expensive. Buyers want to wait to buy because they think prices are going to come down. Sellers want to wait because they think they’re going to keep going up. I’m going to suggest that the cost of waiting can be insurmountable.

I could tell stories about buyers who wanted to wait for the market to cool in 2013 and are now completely priced out of the market and will probably never own unless they have some windfall in their lives. Or sellers that wanted to wait in 2006 and ended up loosing their home to foreclosure in 2009.

Hi, I’m a Procrastinator and I like buying air conditioning equipment.

I don’t. I hate buying air conditioning equipment. And I hate watching people make decisions that I know are not going to benefit them in the long term. After all, with very few exceptions, people who own real estate have 36 times the average net wealth that renters have. Thirty six times!

Part of that is that homeowners are creating equity with every house payment as opposed to making their landlord wealthy with every rent check. I don’t know how the new tax law is going to affect the mortgage interest deduction (which you can thank me and every other dues paying Realtor member of the National Association of Realtors who fought to keep that deduction in place) and property taxes going forward, but there are still deductions available to homeowners that renters don’t get to benefit from.

OK, so what is the real cost of waiting.

Factors:

Interest rate

Cost of purchase

Tax benefits

Current interest rates are hovering around the high 4’s. We’re going to use 5% for this example. And we’re going to use Bay Area prices.

The median price in the Bay Area is hovering around $900,000. I know, that’s nuts. There are plenty of homes in other price points in the Bay Area. Buyer has 5% down so it’s going to be a jumbo loan with PMI. The total amount to close this is going to be around $72,000. The payment is going to be around $4,589.82. Taxes are going to be around $10,000 a year and there is going to be PMI (private mortgage insurance) on the loan at around $335.00. The house payment is going to be around $5760. Over a period of two years, this loan will pay down to $827,990.74 adding around $22,000 to your equity. Now you have around 7.5% equity, plus you’ve been receiving the tax benefit for two years. What if the market goes up? Yay! More equity. What if the market goes down? Boo, your equity disappeared, but you’re still living in your own place and no one (except the City) can tell you what to do with it. You keep paying your mortgage and the market recovers after a long arduous five year wait and the market starts running again. Yay! You’ve paid it down to $783,817.23 in your first five years and can probably dump the PMI. Yay! Again! And for those five years you’ve been writing off all of your deductions on the home.

Now let’s say you’re the seller. You want to wait to next year because you want to squeeze every penny you can out of it. After all this is the Bay Area and it will keep running….right? Well maybe not. The same guy who bought the home above could qualify for the large loan today, but interest rates returned to the historic norm which is 6%. Now that payment is $5126.16 plus $335 PMI and $833 in taxes and that buyer just can’t afford your home any more. Now you aren’t average and there is pressure on the market and what was $900,000 this year is barely $800,000 because they can only qualify for a $755,000 loan. That buyer isn’t going to buy that home any more, they’re looking at a smaller home and as a seller, that seller is feeling the downward pressure on the market.

There is a cost of waiting. Sometimes, it is appropriate. Sometimes it’s misguided and will ultimately doom someone’s hopes and aspirations. Don’t let that happen to you. Find out what you can, can’t, should and should’t do right now. Call or text 925-381-2998

Several of my clients celebrated birthdays over the weekend. I was lucky enough to speak or see quite a few of them. As each of us takes another trip around the sun, the truth is we’re all getting older. And that beats the hell out of the alternative.

Roughly 10,000 baby boomers are going to turn 65 today. Another 10,000 will turn 65 tomorrow. And so on. Our population is growing older and as they do, they need help. Some may not need help at 65 or even 75, but there will be a point where they need assistance. Maybe they can no longer safely get in and out of their shower or bathtub. Maybe they forgot whether or not they had lunch. Interesting fact, seniors tend towards dehydration because they forget to drink water. Many falls are the result of undiagnosed UTI’s. Once someone falls and breaks something, the road back can be long and difficult. Each of my parents fell and broke a hip. My father spent the night on the floor because no one could help him up. Scammers prey on our seniors. They become lonely and the scammer knows how to be of comfort…right before they get their checking account information. There is now the Sandwich Generation. Those folks still have to work, they have kids either still at home or are paying for college and their parents are retired and need help. The weight can be crushing.

While my father was alive, my mother was able to care for him. We did not know that my mother was suffering from Alzheimer’s disease. She was a very intelligent woman and hid her symptoms eloquently, until one day she couldn’t any more. With my father gone my brother and I struggled to balance work, life and making sure our mother didn’t 1) burn down the condo complex 2) wander away 3) give her credit card to a scammer 4) let a scammer into the house (I called one day and she said she couldn’t talk that the vacuum cleaner salesman was vacuuming the rug.) Add to that a plethora of things we could not begin to predict. It was stressful. We cooked meals in advance for her so we knew she had good food to eat. We checked on her daily to be sure she hadn’t “fallen and couldn’t get up”. We took phone calls that barely made sense. I canceled my New Year’s Eve plans to take her to the hospital because she fell that night. I left events and parties because she called confused and if I didn’t I had no idea what crazy thing she was going to do next. She called me at 5:30 in the morning to tell me not to worry she was getting a ride to the hospital with the firemen. She wasn’t hurt, she called 911 got an ambulance ride for an old shoulder injury. Her mind was gone but she could still dial a phone. That doesn’t count the times I was out of town and my brother dropped everything to ferret out what was going on in her failing mind.

If any of this sounds familiar, I’m with you. I get it. Been there. Done that. Got the t-shirt.

Mom is still with us, living in a memory care facility, which in our case was the best decision to keep her safe. Each family has different dynamics and different abilities. In our case, everyone has to work to keep our own families afloat so keeping her in place or having her move in was not an option. For some families, that’s the perfect option. Sometimes that’s the sweetest time together. Sometimes in home care is the solution. We did that until it was not enough.

One of the resources we used was Senior Helpers in Concord. Jenny’s staff took great care of my mother after she broke her hip and going forward until it was time to place her. Jenny even helped us place my mother in the best place possible and helped us with the details of the best way to move an Alzheimer’s patient. (Hint: it’s not easy).

Another resource I wanted to share was the VA. If your senior is a veteran the VA has a program to give you a respite of 16 days if the family is the primary caregivers. The vet goes into the VA for up to 16 days and that gives the family a break. Sometimes it’s just a mental break, sometimes having the senior out of the house allows for deep cleaning or flooring to be replaced that would otherwise be impossible.

The bottom line, no matter how unique your situation, you’re not alone. There are resources to help you honor your loved ones as they age. I can be reached at 925-381-2998. I would be pleased to connect you to reputable folks who can help your loved one.

Christopher Bullock first uttered these words in the Cobler of Preston in 1716.

“Tis impossible to be sure of anything but Death and Taxes.”

Ben Franklin usually gets credit, but he was not the first, and certainly not the last. Jim Morrison famously wrote “No one gets out of here alive”. And no one does. Death is the great equalizer. We all leave this life toes up.

In our society, we spend a tremendous amount of time avoiding the subject. We don’t look forward to answering the question “what might happen when I die”. Personally, I had a near miss last year. Doctors misdiagnosed me with the flu. I had pneumonia. They treated me with a cough suppressant which is the worst thing you can do for a pneumonia patient. By the time they properly diagnosed me I was starting to go septic. While I was laying in that hospital bed I thought “I have to come back from this, my house is a disaster!” I did and today my house is less of a disaster. Because when you die, someone has to deal with your living space, whatever that is. It can be a miserable task. In my mind the less hellish I can make that for my family the better. Since I got out of the hospital, bags of clothes I haven’t worn in over a year have been taken to Goodwill. Truckloads have gone to the dump. While this isn’t an article about organizing, it could be. And I still have a long way to go, but I am living a much less cluttered life.

Most of us don’t get to choose when our ticket gets punched. I was minding my own business when a guy sat down next to me on a plane. He was sweating and coughing and three days later I had pneumonia. Over the years I have known people in their 40’s who went to bed and never woke up. People in their early 50’s who have suffered massive, fatal heart attacks. People who have died driving to work, riding their bike, watching the stars. I’ve seen random acts of God, earthquakes, fires, hurricanes, tornados all end the lives of otherwise happy and healthy people. And I almost got my ticket punched just for taking a flight from Vegas to Phoenix. We. Just. Don’t. Know.

So the question is, knowing that information, why do we not at least make some cursory plans for the one thing we all know we will do? It’s really not that hard to do some estate planning. Take a couple of hours and set things up so that while your family is grieving your passing they also don’t have to deal with attorneys and courts and appraisers and the government standing there with their hand out. They are going to probably have to deal with your stuff. I’ll write about that in the next installment of this series. Your real estate is going to be a major source of aggravation. Billy Bob wants to live there rent free but his other brother Billy Ray and their sister from another mister Billie Jo want their money so they can go out and buy the dualie they always wanted and aren’t you spinning in your grave yet? In truth, you knew your sisters kids were a bunch of knuckleheads and you really wanted your home to be donated to Habitat for Humanity and without specific instructions, that’s just not going to happen. The thing is, it’s your life. Your legacy, your way.

The State will divvy your stuff up according to a predetermined formula without regard for your wishes. If you do some estate planning in advance, your possessions and your wealth can be distributed to the people and organizations you want. Your wishes are fulfilled.

The first step is to determine what the best way to set up your estate. Are you a key employee? Are you self employed? Your death could mean the end of income for your family. Is that part covered? Do you need life insurance? Should you have a trust? Only an Estate Attorney can answer these questions for sure. Don’t rely on a google search to properly provide for your loved ones once you’re gone.

Every individual’s situation is different, yet at the end of the day, no one gets out of here alive. I have extraordinary estate attorneys that I work with. I would be pleased to refer you or someone you care about to one of them. Don’t let the government determine what happens to your life’s work once you’re gone.